Comparing Medical Care Expenditures of Two Diverse U.S. Data Sources

By Branch, E. Raphael | Monthly Labor Review, March 1987 | Go to article overview

Comparing Medical Care Expenditures of Two Diverse U.S. Data Sources


Branch, E. Raphael, Monthly Labor Review


Comparing medical care expenditures of two diverse U.S. data sources Most families in the United States spend some of their disposable income for medical care. The amount depends on the medical commodities and services obtained and also on the financing of these expenses. This article looks at the cost of health care to consumers, exclusive of financing by other parties--referred to here as direct payments for personal health care or out-of-pocket expenditures for medical care.

The share of family expenditures spent on medical care actually declined over the 1960-61 to 1982-83 period, despite rising prices and greater utilization of physicians and ambulatory services. However, during the period, there was an expansion in the availability of health insurance and an equal or greater increase in employer-provided health benefits. Also, Federal programs for health care provision and financing were introduced which affected medical care costs to households. The introduction of medicare and medicaid payments in 1966 and their expansion in 1972 and 1978 are examples of this kind of legislative initiative. Such changes in the structure of health insurance coverage have affected the proportion of health care costs paid by consumers.

Consumer spending for medical care rose rapidly between the 1960's and the 1980's. However, the consumer share of total personal health care costs, which include payments by third parties, declined. In 1960, these consumer costs accounted for 55 percent of total personal health care costs; in 1984, they accounted for only 28 percent. Third parties are private health insurers, Federal, State, and local governments, and philanthropic organizations. The items covered by the costs include all health commodities and professional services.

Data from the BLS Consumer Expenditure Survey show the effect of the structural changes in health care financing on the family budget. Medical care expenditures have been rising, but medical care has been accounting for a declining share of the total family budget. From 1960-61 to 1982-83, consumers' annual average expenditures for medical care rose almost 200 percent, but the rise in other living expenses was somewhat greater. As a proportion of total family expenditures, medical care expenditures declined from 6.1 percent to 4.6 percent. (See table 1.)

Data sources

As part of the evaluation process, the BLS compares Consumer Expenditure Survey results with other relevant data. This article compares health care expenditures data from the Consumer Expenditure Survey (CE) with those from the National Health Accounts (NHA).

The CE and the NHA are constructed for different purposes and, hence, use different estimation methods. The CE focuses on family spending and is the major source for out-of-pocket data by demographic groups. The NHA focuses on national aggregate expenditures for all health care by categories and sources of financing. The estimates from both sources are subject to sampling and estimation errors. Because of the differences in methodology between CE and NHA, we expect some differences in the resulting aggregates. The purpose of this analysis is to look at the extent and direction of the differences.

The BLS Consumer Expenditure Survey has been conducted annually since 1980 and at approximately 10-year intervals before then. It provides data that allow analysis of the changes in out-of-pocket costs over time. The principal objective of the survey is to collect data which provide a continuous flow of information on the buying habits of different types of consumer units. The data are used in a wide variety of research by government, business, labor, and academic analysts, including the periodic revisions of the Consumer Price Index.

The CE is conducted by the Bureau of the Census for the BLS. It consists of two components: a quarterly Interview survey in which the expenditures of consumer units are obtained in five interviews conducted every 3 months; and a Diary, or recordkeeping, survey, completed by participating consumer units for two consecutive 1-week periods. …

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